The Challenge of Credit Card Fees in QuickBooks

QuickBooks, both the Online and Desktop versions, does not have a native feature to automatically add credit card processing fees when a customer pays by card. This presents several challenges for businesses:

• Manual work is required to add fees to each invoice
• Fees may be forgotten or calculated incorrectly
• It's difficult to only charge fees to customers who pay by card
• Reconciling payments and fees can be time-consuming

Despite these challenges, there are several workarounds and third-party solutions that can help QuickBooks users manage credit card fees more efficiently.

Manual Methods for Adding Credit Card Fees

While not ideal, there are manual ways to add credit card fees in QuickBooks:

Create a Credit Card Fee Service Item

One option is to create a service item for credit card fees:

1. Go to Lists > Item List (Desktop) or Products and Services (Online)
2. Click New Item/Add New
3. Choose Service as the item type
4. Name it "Credit Card Fee"
5. Assign it to the appropriate income account
6. Set a default rate (e.g. 3%)

You can then add this item to invoices manually when needed. The downside is you have to remember to add it and calculate the correct amount each time.

Use a Custom Field

Another manual method is to add a custom field for credit card fees:

1. Go to Custom Fields in your company settings
2. Create a new field called "Credit Card Fee"
3. Add this field to your invoice template
4. Manually enter the fee amount in this field when creating invoices

This allows you to itemize the fee separately on invoices but still requires manual work for each transaction.

Adjust the Payment Amount

When receiving a credit card payment, you can:

1. Record the full invoice amount as paid
2. Create a new invoice for just the credit card fee
3. Apply the fee invoice to the payment

This accurately tracks the fee but creates extra transactions to manage.

Third-Party Apps and Integrations

For a more automated solution, there are several third-party apps that integrate with QuickBooks to handle credit card fees:

PayorCRM

PayorCRM is a payment processing platform that integrates with QuickBooks Online. Key features include:

• Automatically adds credit card surcharges to invoices
• Performs real-time BIN lookup to verify card type
• Reconciles invoices and fees in QuickBooks
• Compliant with GAAP and card network rules

Melio

Melio is another payment solution that works with QuickBooks:

• Allows businesses to pay vendors by credit card
• Can pass credit card fees on to customers
• Syncs transactions back to QuickBooks
• Offers ACH and check payment options as well

ChargeOver

ChargeOver is a recurring billing and payments platform:

• Integrates with QuickBooks Online and Desktop
• Can add percentage-based surcharges for credit cards
• Handles recurring billing and subscriptions
• Provides a customer portal for online payments

Invoiced

Invoiced is an accounts receivable automation platform:

• Syncs with QuickBooks for invoice and payment data
• Allows configurable credit card surcharges
• Provides online payment options for customers
• Automates collections and reminders

When evaluating third-party apps, consider factors like:

• Integration capabilities with your QuickBooks version
• Pricing structure and transaction fees
• Ease of use for you and your customers
• Compliance with credit card regulations
• Additional features beyond fee handling

Best Practices for Implementing Credit Card Fees

Whether using manual methods or a third-party solution, keep these best practices in mind:

Communicate Clearly with Customers

• Notify customers in advance about any new credit card fees
• Clearly display fees on invoices and at point of sale
• Offer alternative payment methods to avoid fees

Stay Compliant with Regulations

• Check state laws regarding credit card surcharges
• Follow card network rules on fee amounts and disclosures
• Use terminology like "non-cash adjustment" instead of "surcharge" where required

Consider the Impact on Sales

• Analyze whether fees may discourage credit card use
• Compare potential lost sales to the fees saved
• Consider absorbing fees for certain customers or transaction types

Keep Accurate Records

• Use consistent naming conventions for fee line items
• Reconcile fee income with processor statements regularly
• Track fee expenses separately from other business costs

Regularly Review Your Fee Structure

• Monitor your actual processing costs vs. fees charged
• Adjust fee percentages as your processing rates change
• Consider flat fee vs. percentage models for different transaction types

Setting Up QuickBooks for Credit Card Fees

To prepare QuickBooks for handling credit card fees:

1. Create a dedicated income account for credit card fees
2. Set up a credit card fee item as a service or product
3. Customize invoice templates to include fee fields
4. Configure your chart of accounts to track fee income separately
5. Set up bank rules to categorize incoming credit card payments

Automating Fee Calculations

While full automation isn't built into QuickBooks, you can streamline calculations:

• Use Excel formulas to calculate fees based on invoice totals
• Create memorized transactions with formulas for common invoice types
• Set up recurring invoices with fee calculations included

Reconciling Credit Card Fees

Proper reconciliation is crucial for accurate bookkeeping:

1. Compare processor statements to QuickBooks records monthly
2. Ensure fee income matches the fees on deposits
3. Adjust any discrepancies promptly
4. Consider using bank feeds to import fee transactions automatically

Alternative Strategies for Managing Fees

If adding fees proves too complex, consider these alternatives:

• Increase prices across the board to cover average processing costs
• Offer discounts for cash or ACH payments instead of fees for cards
• Negotiate lower processing rates with your merchant services provider
• Set minimum purchase amounts for credit card transactions

The Future of Credit Card Fees in QuickBooks

As more businesses seek to pass on credit card fees, QuickBooks may eventually add native support for this feature. In the meantime:

• Continue to provide feedback to Intuit about this need
• Stay updated on QuickBooks feature releases and updates
• Be prepared to adapt your processes as new options become available

Conclusion

While automatically adding credit card fees in QuickBooks isn't straightforward, there are workable solutions available. By combining manual methods, third-party integrations, and best practices, businesses can effectively manage credit card fees while maintaining accurate financial records in QuickBooks.

The key is to find a balance between recovering processing costs and providing a smooth payment experience for customers. With careful implementation and clear communication, adding credit card fees can help protect your bottom line without alienating your clientele.

Remember to regularly review your fee structure and QuickBooks setup to ensure it continues to meet your business needs as you grow and as payment technologies evolve. By staying informed and adaptable, you can navigate the complexities of credit card fees while leveraging the powerful accounting features of QuickBooks.

Citations: [1] https://quickbooks.intuit.com/learn-support/en-us/other-questions/how-do-i-add-the-credit-card-processing-fee-to-an-invoice/00/1379329 [2] https://quickbooks.intuit.com/learn-support/en-us/reports-and-accounting/is-there-a-way-to-automatically-add-a-processing-fee-if-a/00/1329636 [3] https://quickbooks.intuit.com/learn-support/en-us/reports-and-accounting/how-do-i-charge-customers-credit-card-processing-fee-on-an/00/575944 [4] https://quickbooks.intuit.com/learn-support/en-us/payments/credit-card-processing-fee/00/1077346 [5] https://quickbooks.intuit.com/learn-support/en-us/reports-and-accounting/how-do-i-add-the-credit-card-processing-fee-qb-is-charging-me-to/00/1397436 [6] https://www.youtube.com/watch?v=nFNq8TMvd7Y [7] https://quickbooks.intuit.com/learn-support/en-ca/sales-customers/how-to-automatically-add-convenience-fee-to-credit-card-payments/00/1401793